Kusserow on Compliance: Huge fraud schemes involving telemedicine and DME

– Charges against two dozen people involving over $1.2 billion

 – Administrative Action against 130 DMEs submitting $1.7 Billion in claims

The DOJ announced charges against 24 defendants—including the CEOs, COOs, and others associated with five telemedicine companies, the owners of dozens of durable medical equipment (DME) companies, and three licensed medical professionals—associated with health care fraud schemes involving more than $1.2 billion. CMS and the Center for Program Integrity (CPI) have taken adverse administrative action against 130 DME companies that had submitted over $1.7 billion in claims and were paid over $900 million. The scheme involved payment of illegal kickbacks and bribes by DME companies in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for back, shoulder, wrist, and knee braces that were medically unnecessary.

The DOJ alleges those charged with paying doctors to prescribe DME either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. The proceeds of the fraudulent scheme were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts, and luxury real estate in the United States and abroad. Some of the defendants obtained patients for the scheme by using an international call center that advertised to Medicare beneficiaries and “up-sold” the beneficiaries to get them to accept numerous “free or low-cost” DME braces, regardless of medical necessity. The international call center allegedly paid illegal kickbacks and bribes to telemedicine companies to obtain DME orders for these Medicare beneficiaries. The telemedicine companies then allegedly paid physicians to write medically unnecessary DME orders. Finally, the international call center sold the DME orders that it obtained from the telemedicine companies to DME companies, which fraudulently billed Medicare. Collectively, the CEOs, COOs, executives, business owners and medical professionals involved in the conspiracy are accused of causing over $1 billion in loss.

 

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2019 Strategic Management Services, LLC. Published with permission.

DME company owner convicted on 18 counts, receives 80-month sentence

The owner of a medical equipment supply company faces 80 months—just under seven years—in prison and was ordered to pay restitution of about $2 million after directing a fraud scheme. The New Orleans-based company, called Psalms 23 DME LLC (Psalms), used patient recruiters to get the names and billing information of local Medicare beneficiaries, and then fraudulently billed Medicare for durable medical equipment (DME) for these patients.

Scheme

The government’s evidence at the trial showed that Psalms billed for equipment from power wheelchairs to back braces, mostly for beneficiaries that did not need, want, or even receive the equipment. Most of the $3.3 million in claims billed were fraudulent, and the company received $2 million in payment on these claims.

The owner was convicted of 18 counts of fraud, conspiracy, and other charges following a five-day trial.

DMEPOS suppliers accept adjusted fee schedule rates

Durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers in non-competitive bidding program areas are accepting adjusted payment rates that were phased in beginning in 2016. CMS posted quarterly monitoring data suggesting that the adjusted rates are adequate to cover the costs of furnishing DMEPOS and have had no negative impact on beneficiary access. The fully adjusted billing rates will take effect in non-competitive bidding areas beginning July 1, 2016.

Competitive bidding program

CMS has operated the DMEPOS competitive bidding program (CBP) since January 2011 to improve upon the prior DMEPOS fee schedule, which was based on historic supplier charges from the 1980s and resulted in excessive payments. Medicare saved more than $580 million upon the completion Round 1’s three-year contract period, which lasted from 2011 through 2013. After the first two years of Round 2 and the national mail-order programs, which began in July 2013, it saved approximately $3.6 billion.

Non-CBP areas

Section 1834(a)(1)(F) of the Social Security Act requires CMS to adjust fee schedule amounts for durable medical equipment (DME) on January 1, 2016, in non-CBP areas. Section 1842(s)(3)(B) authorizes adjustments to the fee schedule amount for enteral nutrients, equipment and supplies based on information from CBPs. To combat stakeholder concerns that the adjustment might negatively impact quality and access to items and services, CMS decided to phase in the adjustments to the fee schedule amounts for claims with dates of service January 1, 2016, through June 30, 2016, with each fee schedule amount based on a blend of 50 percent of the fee schedule amount that would have gone into effect on January 1, 2016, if not adjusted based on information from the CBP, and 50 percent of the adjusted fee schedule amount.

Data

Suppliers in non-CBP areas are not required to accept assignment of Medicare claims for items subject to competitive bidding and may instead collect the extra money needed to cover their costs directly from the beneficiary. However, the data for 2016 show that suppliers in non-CBP areas have accepted the new, adjusted rates as payment in full. Overall, there was no change in the rate of assignment for the first four months of 2015 (99.87 percent) compared to the first four months of 2016 (99.88 percent). The data are also broken down by geographic regions, rural versus non-rural classification, and DMEPOS item category. CMS will continue to monitor data for the second quarter of 2016 and after the fully adjusted payment rates are implemented beginning in the third quarter.